Share buy back raises share value for stockholders. Lower overhead increases share prices. Owners/shareholders drive every public company.
In that case, perhaps it would have been better to name the $1.5 trillion federal tax giveaway "The Stock Buyback and Owner Subsidy Act" rather than the "Tax Cut and Jobs Act"
There are a few companies (DVN, CHK) that over hired and they're now finally right sizing to become more economical. The effects that has in OKC RE is the interesting factor. CHK's campus was built for the hey dey, and the need for a surplus of employees (especially in the land dept) is unneseccary. It's also interesting to talk to BOKF employees who don't anticipate Devon occupying any space of their new building. The benefit to OKC is the new spinoffs that have resulted from the layoffs. The new companies (Mach, Valorem, etc.), plus the number of mineral and leashold LLCs is really spurring the entrepreneurship here. There are a number of NYC finance people that have moved here for AEP jobs, etc. that stuck around bc they love OKC. The buzz here is growing, and not only in oil and gas, with the investment bank crowd and that says a lot about the growth we've had over the past year. Also, when they found they could buy a "cheap" home in CH or NH for $750m, they were sold.
Unconfirmed rumor of 300 new layoffs today.
Just traded messages with a Devon employee...
This is execution of the 300 layoffs they announced on April 10th.
And people are being released immediately.
If the company has too many employees for the business they conduct today, what would you have them do? They are already, likely, paying their employees a better than market rate due to recent competition for qualified employees. Energy industry benefits are already significantly better than most others and they are not planning to increase their exploration or other businesses significantly in the near future. Stock buybacks do, generally, benefit the stockholders but they can also be a better way of returning equity to shareowners than dividends, they can be a way to make it marginally harder for an outside firm to launch a takeover, they can improve the balance sheet by unloading unneeded equity if there are no viable investments foreseen. Businesses are not there to spend money needlessly employing people they don't need. Your assumption of greed is by far the only reason to take such action. Not all stock owners are cigar-smoking wealthy people sitting on yachts somewhere. A large portion of ownership is likely employees or people like you and me who have mutual funds or ETFs in our 401Ks that contain shares of Devon. Their action could benefit you indirectly.
At a time when corporate profits were at a high and increasing, and unemployment levels were low, and automation and technology keep replacing employees, it was curious why exactly a tax cut was needed to "stimulate the economy and put people to work". It was obvious to most that the tax savings would increase the national debt while moving those tax dollars to corporations, allowing them to buy back stock and bonus out executives. It is a redistribution to asset owning Americans rather than working stiffs. This was predictable.
I agree the tax cut timing was interesting however, a tax cut is not a redistribution of wealth to a corporation. In your line of thinking would tell me you feel earnings of the corporation, or the individual, belongs to the government first. In your scenario, a tax cut returns money belonging to the government back to the corporation. Tax cuts allow the corporation to keep revenue THEY HAVE EARNED to put it to use in other ways such as pay raises, bonuses for employees, increased R and D and, yes, stock buybacks. As I said earlier, stock buybacks serve multiple purposes. When over half of Americans own stock, either individually or through 401k plans in mutual funds (indirect ownership), stock buybacks are a great help to tens of millions of people. Its just a different form of a dividend.
We work in a global economy now. US corporate tax rates were some of the highest in the world. The cut was to allow US businesses to better compete worldwide not redistribute wealth. If there is anything Trump has done, he has concentrated his efforts at leveling the playing field U S businesses have to play under globally.
As far as deficits are concerned, that is a problem and has been for 30 years. The theory is that with higher corporate profits and higher employment, revenues increase - just as they did under Clinton.
Devon Energy to sell EnLink Midstream interests for $3.13 billion
https://www.reuters.com/article/us-d...-idUSKCN1J215Y
More layoffs coming. Their stack acreage is a bust as well. If you short stocks, short this.
Makes sense as they are moving to the SCOOP next year.
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